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Alternative Dispute Resolution

Settlement of disputes through reference to a third party is a part of the spirit of India since times immemorial. ADR can be broadly classified into two categories: court-annexed options (Mediation, Conciliation) and community based dispute resolution mechanism (Lok-Adalat).

Alternate dispute resolution mechanism was incorporated to have a speedy and out of court fair and efficient settlement of disputes where the parties to the transaction seek an amicable settlement of that dispute by recourse to conciliation. There are alternatives to litigation, most of which fall under the general category of “Alternative Dispute Resolution.” Two of the most common options are mediation and arbitration. ADR helps to reduce or minimize the burden of full litigation.

Mediation: Settlement by ‘mediation’ means the process by which a mediator appointed by parties or by the court, as the case may be, mediates the dispute between the parties to the suit by the application of the provisions of Mediation Rules, and in particularby facilitating discussion between the parties directly or by communicating with each other through the mediator, by assisting parties in identifying issues, reducing misunderstandings, clarifying priorities, exploring areas of compromise, generating options in an attempt to solve the dispute and emphasizing that it is the party’s  own responsibility for making decisions which affect them.

Arbitration: Arbitration is generally recognized as a more formal process than mediation, where an arbitrator is jointly selected by the parties to actually make a ruling in the case. Each side is allowed to “present” their case.  A typical example would be salary arbitration between an Employee union and Employer, where the arbitrator’s decision is binding. Arbitration is also a frequent clause in real estate purchase agreements.

CHALLENGES

  • Company Law rules are asymmetric with the prevalent stand of India as per the UNICTRAL model
  • There is a kind of apprehension among lawyers regarding ADR because of uncertainty and fear of losing business, (which is unfounded due to the pendency of large number of matters).
  • There is a need for training mediators so that most disputes can be solved through ADRs.
  • People are still not incorporating arbitration clause in their agreements.

OBSERVATIONS

The intention behind introducing amendments in ADR was to make it less technical and more useful and effective, which not only removes many serious defects of the earlier arbitration law, but also incorporates modern concepts of arbitration. Our system in general still needs inculcation of the culture of arbitration within the bar, the bench and the arbitral community.

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